Strategy (MSTR) Stock: Inside the New Digital Credit Capital Framework

TLDR

• TD Cowen cut its price target on Strategy (MSTR) to $260 from $400, while keeping a Buy rating.
• The cut reflects a more conservative Bitcoin price forecast, not concerns about Strategy’s new financial plan.
• TD Cowen still sees roughly 200% upside in MSTR from current levels.
• MSTR jumped over 12% on Monday after Strategy unveiled a new Digital Credit Capital Framework.
• Strategy paused Bitcoin buying and sold $1.15 billion worth of MSTR stock, drawing criticism from crypto figures including Ripple’s Brad Garlinghouse.

TD Cowen has trimmed its price target on Strategy (MSTR) stock to $260, down from $400. The firm kept its Buy rating in place despite the cut.

The move comes just a day after MSTR stock surged more than 12%. That rally followed Strategy’s announcement of a new plan to manage its Bitcoin holdings.

Strategy Inc, MSTR

TD Cowen says the lower target has little to do with that announcement. Instead, the firm pointed to a more cautious outlook on Bitcoin’s long-term price.

The analyst behind the call described Strategy’s new framework as “a positive for credit visibility and capital flexibility.” That’s a fairly upbeat take for a price target cut.

Even with the reduced target, TD Cowen still sees about 200% upside from where MSTR trades today. That’s a big gap between price and target, however you slice it.

What’s in Strategy’s New Framework

Strategy filed details of its Digital Credit Capital Framework with regulators on June 29. The plan allows the company to raise up to $1.25 billion by selling some of its Bitcoin.

That cash would go toward several things. These include funding preferred dividend payments, covering interest obligations, building cash reserves, and supporting future stock buybacks.

Strategy also approved a buyback of up to $1 billion in its Digital Credit Securities. That could cover STRC, STRF, STRD, and STRK, depending on what management decides strengthens the balance sheet most.

Notably, the company has hit pause on buying more Bitcoin for now. It also sold about $1.15 billion worth of MSTR stock as part of the broader plan.

Backlash From Crypto Circles

The Bitcoin sale piece of this story hasn’t gone over well with everyone. Critics argue that any Strategy Bitcoin selling could weigh on sentiment across the wider crypto market.

Ripple CEO Brad Garlinghouse has been one of the louder voices. He’s publicly criticized Michael Saylor’s company over its role in the recent crypto downturn.

Saylor, for his part, has kept urging the market not to sell Bitcoin. That stance has only added fuel to the debate happening online.

Not everyone sees the selling as bad news, though. A Grayscale executive recently suggested a larger $3 billion Bitcoin sale by Strategy could actually boost investor confidence in both MSTR stock and STRC.

So there’s a real split in opinion here. Some see Strategy diversifying smartly; others see a Bitcoin maximalist stepping back from its core strategy.

For now, the company has paused its Bitcoin buying spree while it works through this new capital framework. TD Cowen’s revised $260 target stands as the latest analyst take on where MSTR goes from here.

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